Preliminary Syllabus
Industrial Economics and Competition Policy
(summer term 2016)
Johannes-Kepler-University Linz
Dr. Johannes Paha
This version: March 3, 2016
Course Description and Goals: The participants of this seminar shall learn how to use high-quality
research in the field of industrial organization to solve questions that have recently been posed in
competition policy. The participants shall learn how to work scientifically and how to write scientific
texts. In particular, they shall go through, understand, and present research that has been published in
renowned journals such as RAND Journal of Economics, International Journal of Industrial Organization
or Journal of Industrial Economics.
1. As a first step, the participants shall study sector inquiries, decisions, and other reports of
competition authorities to learn about the specific questions of practical importance that have
recently been asked in competition policy – to be completed by March 16.
2. As a second step, the participants shall search for and get an overview about research literature
that helps to answer these questions – to be completed by March 23.
3. In a third step, based on their review of the policy- and the research-literature, the participants
shall pick one specific research question and answer it in detail by writing a term paper that
presents the methods and the results of recent (empirical and theoretical) research. Ideally, the
participants will focus on one high-quality research article that was published in a B+ Journal or
higher1 and discuss it in detail. This also requires discussing and presenting related literature.
The research question shall capture the essence of the underlying problem and relate to the
terminology and methods being used in the relevant literature – to be completed by April 15.
4. As a fourth step, the students will present the results of their work to the other participants of
the seminar. Each student is also asked to read and discuss the paper of another student.
Therefore, the term papers shall be submitted one week before the presentations.
Because of the relatively short time span for preparing the term papers, students should assign this
seminar a high priority in their schedules.
1
http://www.handelsblatt.com/downloads/9665428/1/journal-ranking.pdf
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Organization: The seminar comprises four meetings.
(1) Introduction / assignment of topics
(2) Poster-session / colloquium
(3) Presentation of the results
(March 9, 2:00-5:00pm, K127A)
(April 4, 1:45-6:00pm, MZ 005B)
(April 22, 8:30-6:00pm, P215 and
April 29, 8:30-6:00pm, KHG I)
Before the first meeting on March 9, you should have a look at the topics of this seminar and the
literature. Ideally, you should decide on 2-3 potential topics you would like to work on. The students are
asked to email the following information to the instructor no later than March 24 to receive feedback:
Title
What is the main economic characteristic of the case you are working on? (Seminar papers being
concerned with cartel cases might study which events lead to the formation of the conspiracy.)
What is your main research question?
Table of Contents
Literature (What is the main research paper that helps you to answer your research question?)
Prior to the poster-session, each student shall prepare a poster that presents his/her research question,
research method, preliminary results, and a plan for further work. This poster shall be presented briefly
(5 mins) during the poster-session. The topics of the presentation will be discussed with the instructor
and the other students.
Target group: Students of business and economics (Masters, Diplomstudium) with a sound knowledge
of competition economics / industrial organization
Language:
English
Resources:
The participants should subscribe to the newsletters of Competition Policy International
(http://goo.gl/ReeVU) and DG Comp (http://goo.gl/kMQgNJ). Research articles can be
found, e.g., at https://scholar.google.at. Information about specific cases is found at the
Website of DG Comp (http://ec.europa.eu/competition/index_en.html). Motta (2004)
“Competition Policy” may be used as a refresher of topics in competition economics.
Grading:
10% - Poster presentation
50% - Seminar paper
30% - Final presentation
10% - Discussion of another seminar paper
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Papers:
The length of the seminar papers should be 15 pages (plus or minus 1 page). The outline
should be about as follows:
1. Introduction (max. 2 pages – State the research question. Why is this topic relevant
for competition policy? How does it relate to the research literature?)
2. Description of the sector/case (about 4 pages – Describe the market structure in
terms of supply and demand and/or the characteristics of a case.)
3. Main part (about 8 pages – Answer your main research question by presenting
relevant research literature.)
4. Conclusion (max. 1 page – Do not summarize your paper. Rather state its main
outcomes.)
Topics:
(1)
(2)
(3)
(4)
(5)
(6)
(7)
(8)
(9)
(10)
(11)
(12)
(13)
(14)
(15)
(16)
(17)
(18)
(19)
(20)
(21)
(22)
Competitive Restraints in the Banking Industry: Industry Overview
Competitive Restraints in the Banking Industry: Product Tying
Competitive Restraints in the Banking Industry: Price Discrimination
Competitive Restraints in the Banking Industry: The Interest Rate Derivatives Cartels I
Competitive Restraints in the Banking Industry: The Interest Rate Derivatives Cartels II
Competitive Restraints in the Banking Industry: The LIBOR Cartel
Competitive Restraints in the Banking Industry: The Lombard Club
Competitive Restraints in the Banking Industry: The Exchange Rate Fees Cartel
Competitive Restraints in the Banking Industry: The Merger Between Deutsche Börse and NYSE
Competitive Restraints in the Banking Industry: The Merger Between Fortis and ABN Amro
Competitive Restraints in the Banking Industry: The Merger Between BNP Paribas and Fortis
Competitive Restraints in the Banking Industry: Competition in the Market for Payment Cards
(The MasterCard Case)
Competitive Restraints in the Banking Industry: The Efficiency Effects of Joint Ventures and
other Forms of Cooperation
Competitive Restraints in the Insurance Industry: Industry Overview
Competitive Restraints in the Insurance Industry: Information Exchange
Competitive Restraints in the Insurance Industry: Horizontal Cooperation under the Insurance
Block Exemption Regulation
Competitive Restraints in the Insurance Industry: The Cartel Among German Industrial Insurers
Competitive Restraints in the Insurance Industry: Bid Rigging in US Insurance (The Marsh and
McClennan Case)
Competitive Restraints in the Food Industry: Industry Overview
Competitive Restraints in the Food Industry: Buyer Power and Bargaining in the Dairy Industry
Competitive Restraints in the Food Industry: Vertical Restraints in the Austrian Dairy Industry
Competitive Restraints in the Food Industry: Buyer Power and Bargaining in the Retail Food
Industry
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(23) Competitive Restraints in the Food Industry: Mergers in the Retail Food Industry
(24) Competitive Restraints in the Motor Vehicles Industry: Industry Overview
(25) Competitive Restraints in the Motor Vehicles Industry: Buyer Power and Bargaining in the
Motor Vehicles Industry
(26) Competitive Restraints in the Motor Vehicles Industry: The Automotive Bearings Cartel
(27) Competitive Restraints in the Motor Vehicles Industry: The Carglass Cartel
(28) Competitive Restraints in the Motor Vehicles Industry: The Parking Heaters Cartel
(29) Competitive Restraints in the Motor Vehicles Industry: The Automotive Wire Harnesses Cartel
(30) Competitive Restraints in the Motor Vehicles Industry: The Efficiency Effects of Horizontal
Agreements and Joint Ventures
(31) Competitive Restraints in the Motor Vehicles Industry: Vertical Restraints and the Block
Exemption Regulation
(32) Competitive Restraints in the Motor Vehicles Industry: Demand Estimation and Merger
Simulation
(1) Competitive Restraints in the Financial Services Industry
The seminar papers on this topic shall analyze the structure of the financial services industry. It will be
interesting to present merger and cartel cases as well as abuses of a dominant position that have
occurred in this industry recently. Most importantly, it shall be shown which formal-analytic models can
be used to analyze competition in the banking industry. Separate papers will be concerned with the
banking industry and the insurance industry. All papers shall focus on competition policy issues, i.e.,
regulatory aspects shall be left aside.
(a) Insurance industry
Industry associations are important players in the insurance industry. On the one hand, they are
necessary to collect data that is needed to assess risks and calculate insurance premiums
adequately. On the other hand, they may facilitate the anti-competitive exchange of information.
The seminar papers shall present the competition rules and the economic foundations of
information exchange. It may also be relevant to consider the vertical nature of the market given
the importance of re-insurance companies, insurance agents, and brokers. Another relevant topic is
welfare-enhancing horizontal cooperation amongst insurers under the Insurance Block Exemption
Regulation. Basic information is provided by the sector inquiry of the European Commission (2007a)
and its study on co(re)insurance (European Commission 2014). Further aspects to be considered are
the alignment of premiums and conditions, best terms & conditions clauses, potential foreclosure
concerns, and intermediaries’ conflicts of interest.
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(b) Banking industry
The seminar papers on this topic shall analyze competition in the banking industry focusing on
aspects such as switching costs (low customer mobility), barriers to entry, scale economies, or
potential competition. Further seminar papers shall present recent competition cases and analyze
their core characteristics using state-of-the-art economic theory. Important sources of information
are the sector inquiry of the European Commission (2007b) and DG Comp’s decisions of the cases.
The seminar papers shall describe and economically analyze the supply-side and demand-side
characteristics of this market. Competitive restraints in this market shall be presented based on
recent cartel, merger, or other antitrust cases. Another topic to be discussed are welfare-enhancing
forms of cooperation (e.g., joint ventures) among banks, i.e., cooperation generating efficiency
effects. The seminar papers may also be concerned with conduct such as tying or price
discrimination.
Literature
European Commission (2007a). "Business insurance sector inquiry. " http://goo.gl/IBVIOK (accessed
on December 07, 2015)
European Commission (2007b). "Report on the retail banking sector inquiry." http://goo.gl/ADlde
(accessed on December 07, 2015)
European Commission (2014). "Study on co(re)insurance." http://goo.gl/XfZKko (accessed on
December 07, 2015)
Freixas, X. and Rochet, J. (2008). “The Microeconomics of Banking.” 2 nd edition. MIT Press:
Cambridge, MA
Van Hoose, D. (2010). “The Industrial Organization of Banking.” Springer: Heidelberg
Websites
Competition and Markets Authority (2015). “Retail banking market investigation.”
https://goo.gl/aozjU4 (abgerufen am 17.12.2015)
Europäische Kommission (2015). "Financial Services. Overview." http://goo.gl/Haic7r (accessed on
December 07, 2015)
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(2) Competitive Restraints in the Motor Vehicles Industry
Car manufacturers possess buyer power, which may have contributed to the formation of cartels among
the suppliers of car parts. The papers on this topic shall present relevant cases and analyze them
economically (possibly in the light of buyer power). This requires an in-depth presentation of the
characteristics of this industry.
It may also be relevant to study mergers and horizontal cooperation in the automotive industry. For
example, it will be interesting to present research papers studying the effects of joint R&D on innovation
in this industry. Vertical restraints emerge when car manufacturers opt for selective distribution
schemes or supply only certain garages (i.e., car repair workshops) with spare parts. In this context,
there is a vast economic literature on secondary markets.
The seminar papers may also briefly present relevant exemptions from competition laws. Data from the
automotive industry has frequently been used to demonstrate methods for the estimation of demand or
merger simulation. Therefore, it will also be interesting to study this topic from an empirical standpoint.
Please leave aside topics related to state aid.
Websites
European Commission (2015a). "Motor Vehicles. Overview." http://goo.gl/6TtF4x (accessed on
December 07, 2015)
European Commission (2015b). "Motor Vehicles. Cases concluded by the Commission."
http://goo.gl/3yLJH5 (accessed on December 07, 2015)
(3) Competitive Restraints in the Agriculture and Food Industries
The seminar papers shall present and economically analyze recent competition cases in the agriculture
and food industries. It shall be shown which models from industrial organization models can be used to
analyze the competitive restraints relevant in these cases. One set of seminar papers may be concerned
with the agriculture industry another with the food industry. A focus shall be laid on the analysis of
buyer power.
(a) Upstream: Agriculture
The German Bundeskartellamt (2012) published the results of its sector inquiry in the dairy industry
that mainly emphasized buyer power (exercised by dairies and/or retail chains). The seminar paper
shall present (i) fundamental characteristics of the dairy market and (ii) the economic foundations
and models used to analyze buyer power.
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(b) Downstream: Food
Buyer power also plays an important role in the food industry (given the trend to greater retailer
concentration). It may affect prices, choice, and innovation. In its final report on the results of a
sector inquiry in this industry the German Bundeskartellamt (2014) emphasized the potential for an
abuse of a dominant position. The seminar papers shall present the structure of the food industry
and analyze it using models from industrial organization. Here, it will also be interesting to study to
what extent food retailers compete in non-price categories such as the variety of brands offered. An
emphasis shall generally be put on competitive restraints such as the abuse of a dominant position
or joint purchasing agreements. The seminar papers may also study the effects of mergers by food
retail chains (e.g., Edeka and Tengelmann). The seminar paper may use the results of the sector
inquiries of the EU (2014) or BWB (2007). There have also been several vertical restraints cases in
Austria where dairies and retailers agreed on the retail prices of dairy products.
Literature
Bundeskartellamt (2012). "Sektoruntersuchung Milch." http://goo.gl/dKQeVA (accessed on
December 07, 2015)
Bundeskartellamt (2014). "Sektoruntersuchung Lebensmitteleinzelhandel." http://goo.gl/GNznDz
(accessed on December 07, 2015)
Bundeswettbewerbsbehörde (2007). “Allgemeine Untersuchung des österreichischen
Lebensmittelhandels unter besonderer Berücksichtigung des Aspekts der Nachfragemacht.”
http://goo.gl/cqVr4f (accessed on March 3, 2016)
Duso, T., Argentesi, E., Buccirossi, P., Cervone, R., Marrazzo, A. (2016).
“Unternehmenszusammenschlüsse im Lebensmitteleinzelhandel verringern die Produktvielfalt.”
DIW Wochenbericht 1.2016. http://goo.gl/ejFd17 (accessed on January 10, 2016)
European Commission (2014). "The economic impact of modern retail on choice and innovation in
the EU food sector." http://goo.gl/Wk1KNs (accessed on December 07, 2015)
Monopolkommission (2015). "Sondergutachten 70: Zusammenschlussvorhaben der Edeka Zentrale
AG & Co. KG mit der Kaiser's Tengelmann GmbH." http://goo.gl/gQHfoU (accessed on December 08,
2015)
Websites
European Commission (2015). "Agriculture and Food. Overview." http://goo.gl/pv2En (accessed on
December 07, 2015)
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